Growth, at last

November 02, 2009

The burst of economic growth in the third quarter reported last week was notable for all the gripes and worries it elicited from commentators. It was dependent on temporary government programs, they said. It may not be sustainable. It's not generating jobs. It doesn't feel like a recovery.

All true. But contemplating a rebound that hit a 3.5 percent pace, we have something to say: We'll take it.

The economy, after all, hadn't given off a flicker of hope in a long time. Since the recession began in December 2007, total output had contracted by 3.7 percent in inflation-adjusted terms and some 7 million jobs had disappeared, with devastating effects on individuals and communities. The recession had lasted longer than any downturn since the Great Depression. If the third quarter marks the end of it, as it appears, Americans can look forward with hope.

Lest we forget, that's an enormous difference from what we faced a year ago -- when financial institutions were imploding, credit was frozen solid, the stock market was plummeting and the economy teetered on the brink of a catastrophe of the sort unseen since the Great Depression. This has not been a depression but merely a worse-than-average recession. A year ago, most policymakers were hoping against hope for that outcome.

The economy, granted, is not on sure footing yet. The recovery is fragile, and it would be no huge surprise to see another negative quarter in the coming months. The cash-for-clunkers program, which boosted growth by encouraging purchases of new cars, has expired, and vehicle sales have fallen off as a result. The first-time homebuyers credit, which is believed to have helped stabilize home prices, is also due to expire, (though it will probably be renewed).

But there are just as many hopeful signs. If the administration's broad economic stimulus program has any value, it should start to pay off soon, because the money is only now starting to be spent. Exports are on the rise, thanks to a decline in the dollar and better conditions in other parts of the world. Businesses are not drawing down inventories so fast -- raising hopes that new orders will soon pick up. Inflation and interest rates remain helpfully low.

None of this is any immediate comfort to Americans who have lost their jobs, and who cannot realistically expect hiring to pick up for a while yet. If the sun isn't shining on them, though, the first rays of dawn can be seen peeking above the horizon.

The third quarter results are no grounds for celebration, but they are cause to breathe a big sigh of relief.